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Financial planning for special needs

Families naturally want to aid and preserve the happiness of their relatives, and it is likely that you are no exception. If special needs individuals are among those who you love, then you may even wish to give them all that you can to ensure that they can continue to have the best possible standard of living, even after you have passed on. You want to have financial security for future home needs, therapeutic services and medical costs.

But did you know that giving money directly to a person with special needs may jeopardize his or her ability to support him or herself? A qualifying disabled person may be eligible to receive Supplemental Security Income and Medicaid. These government programs give a stable source of income and medical care to individuals with disabilities in this country. Keeping these government benefits can be essential to the well-being of the recipient.

The rules

Supplemental Security Income provides the basic income for general needs. Unfortunately, if a disabled person has more than $2,000 to his or her name, then the extra income will threaten the benefits. This means, if the person receives a substantial monetary gift, he or she can face immediate suspension of disability benefits.

Special needs trusts

Since people with special needs have financial needs like most people, they should not be forced to remain at poverty level. If you want to give money to your special needs child, you can set up a special needs trust. The trust holds any assets so that they do not directly go into the person's name. The disabled person does not fund the trust and is not the trustee (the person who controls the trust).

This setup allows an individual to accumulate assets without losing his or her benefits. It also puts the responsibility in the hands of a carefully chosen person who can advocate for the best interests of the disabled individual. An attorney can help a person create this type of trust since there are legal requirements and the trust needs to remain in compliance with potentially changing laws.

Another tool to benefit special needs individuals

ABLE, a new, tax-free savings plan in Pennsylvania, is another financial planning tool to help qualified disabled individuals. The ABLE plan is for individuals who are diagnosed with severe disabilities before the age of 26. These disabled individuals and their families can save up to $14,000 per year and up to $100,000 overall without endangering SSI. This money can be used for many disability-related needs. Seeking experienced guidance can be beneficial when planning for special needs.